For Businesses
Technology
A vehicle supplier to major car dealerships was experiencing significant growth. The demand for their services outpaced their cash flow capacity, prompting them to seek £250,000 to boost their cash flow and allow them to trade in their growing demand levels.
The business started trading in 2020 but had only reached break-even at the end of 2023. They had 2 years of loss making accounts, the sector was considered high risk, and both the business and the director’s personal credit were poor, making mainstream finance not an option.
Spark advised on proceeding with secured options to reach the full amount required, as the director was a UK homeowner. Spark secured an acceptance that not only met the required amount but surpassed it.
To proceed, the director’s father, who sold the property to the director, was required to sign a declaration of solvency as the property was sold below market value (BMV).
They both initially agreed to it. However, the director’s father shared his discomfort with the next step, which would have been introducing a solicitor to the process. Without this declaration, the secured loan was no longer an option.
Whilst waiting for the director to potentially change his father’s mind on the secured option, Spark explored unsecured options for an immediate cashflow increase, as the business had a discounted stock offer they wished to secure. A cashflow boost would also help build the business’ credit profile, unlocking other finance options.
Spark secured two unsecured short-term loans for the business valued at £30,000 and £48,500, both of which were successfully completed.
The director’s father withdrew from the legal proceedings, but the loans facilitated by Spark successfully improved the business's credit profile. This enhancement enabled Spark to pursue a stock finance facility for the business. An offer was secured using an equitable charge, which removed the previous requirement for a declaration of solvency to leverage the property.
The offer was a £100,000 revolving credit facility with up to 90 days payments terms against every drawn down.
Furthermore, the lender tailored the facility to the client upon Spark’s request. Traditional vehicle stock finance facilities require a Hire Purchase Investigation (HPI)* to be cleared prior to the asset sale. The facility arranged allows the business to sell vehicles without any HPI concerns, enhancing its trading capacity.
*Hire Purchase Investigation (HPI) - a report that shows all information for a vehicle. It includes data such as amount of previous owners, any outstanding finance, and insurance write-offs.
Stock finance facilities are a revolving credit type of finance. The client can withdraw any amount up to the approved limit to purchase stock and repay once sold, with interest pro-rated against time drawn down.
As a founder of multiple businesses, Jamie believes that mindset, discipline and ambition are key drivers for success, both for his businesses and for his clients.
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